Using strategic sourcing to prepare for emerging markets

When an opportunity in a previously untapped economy presents itself, organizations would do well to try and capitalize on it.

However, acting on such a favorable circumstance is much easier said than done. When an enterprise elects to market its goods to a new region of the world, a number of implications impact the supply chain. The numbers may present themselves as favorable, but connecting with logistics partners, considering the needs of in-field operations and procuring the talent, assets and materials needed to satisfy new customers is quite a challenge. 

How strategic sourcing can simplify the process 

Setting up new protocols and procedures to satisfy the needs of consumers or businesses in "uncharted" territory means considering the impact such changes will have on existing strategies. If a company chooses to set up shop in Brazil but also leverages strategies for the Canadian, U.S. and Mexican economies, its personnel are responsible for strengthening existing supplier relationships, establishing new ones and determining whether expenses will exceed projected revenue. 

When posited in this manner, catering to an emerging market appears quite intimidating. What strategic sourcing can do is eliminate any omissions from occurring. Revisit the hypothetical enterprise with operations in Mexico, the U.S. and Canada and suppose this business is segmented into three divisions. If each of these segments were obligated to acquire the resources necessary to conduct processes effectively, certain oversights could occur.

For instance, the VP of information technology for the U.S. department may set up a contract with a software company that delivers enterprise applications through the cloud. Then, the Canadian division follows the same process, but sets up a contract with a different program developer. This seemingly benign blunder can result in two consequences:

  1. Information is hard to organize: Global corporations need a comprehensive view of all their finances, from the bottom upward. If such data is being handled by more than one system, it will likely take the accounting team more time than is necessary to attain a solid understanding of how the company is faring from a monetary perspective. 
  2. Unforeseen savings can be lost: In reference to the aforementioned example, it would have made more sense for the enterprise's centralized procurement team to consider the needs expressed by all parties and develop a partnership with a software provider that would satisfy those demands. 

From the perspective of a company considering the benefits of expanding into an emerging market, strategic sourcing will provide a concise idea as to whether it has the relationships and resources necessary to move forward. 

How important is the supply chain? 

In many respects, procurement, spend analysis and distribution is everything. Accenture recently conducted a study on how enterprises are positioning themselves to penetrate emerging markets, acknowledging that a contingency of professionals found their supply chains helped them achieve growth rates 20 percent or larger in new economies. The research also made the following notable discoveries:

  • Many company leaders chose to establish connections with local talent and partners in order to more effectively execute operations. 
  • Over one-third (39 percent) of survey participants asserted the importance of becoming better acquainted with their market's culture. 
  • The majority of respondents (72 percent) maintained they utilize technology to bolster their companies' initiatives to succeed in emerging markets. 

There's no doubt that creating relationships among local companies well acquainted with the landscape is essential. Furthermore, software's contribution to the space shouldn't go unacknowledged either. 

Overall, these marketing-driven considerations should be combined with the knowledge accrued by teams employing strategic sourcing. That way, enterprises will be well-prepared to enter markets with which they're not necessarily familiar. 

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